Check It Out

It's impossible to get away from the cacophony of economic news, so here's some books that I'd like to add to the mix of electronic and news media.

"Lords of Finance: the Bankers Who Broke the World" by Liaquat Ahamed (Penguin, 2009). Investment banker and Brookings Institution trustee Ahamed is NOT talking about the crop of contemporary rapscallions being bawled out by angry citizens and Congressmen, but instead about four central bankers of the 1920s and 1930s - Benjamin Strong of the Federal Reserve Bank of New York, Montagu Norman of the Bank of England; Émile Moreau of the Banque de France, and Hjalmar Schacht, who headed the German Reichsbank.

In these pages we witness the trauma of WWI that brought an end to several decades of worldwide prosperity, the post-war European economic chaos, the controversy over the final price tag on war reparations and debt, the contentious but necessary move away from the gold standard, runaway inflation and rise of fascism in Germany, and the beginning of the Great Depression.

Ahamed certainly doesn't fault the central bankers for any of this. He merely analyzes their mistakes and says (in hindsight) what they could have done better. What's scary is that their well-intended efforts didn't prevent a meltdown, and today's worldwide financial system is infinitely more mind-boggling.

"The Woman Behind the New Deal: the Life of Frances Perkins, FDR's Secretary of Labor and His Moral Conscience" by Kirstin Downey (Doubleday, 2009).

Perkins, an East Coast blue blood whose family fortune had faded, earned a B.A. degree from Mount Holyoke College in 1902, then moved to Chicago where she taught and worked as a volunteer, including at Jane Addams' Hull House. After finishing her Masters Degree in Sociology at Columbia in 1910, she served as head of the New York Consumers League, chairwoman of the New York State Industrial Commission under Governor Al Smith, and finally state industrial commissioner under Governor Franklin D. Roosevelt.

President Roosevelt was so impressed that he tapped her as his Labor Secretary. She was the first female cabinet officer in history.

Perkins was a master politician, stateswoman, and society hostess with a heart of gold who played a key role in implementing New Deal policies, including social security for the elderly and disabled, unemployment insurance, healthy working conditions, and an end to child labor. Her one regret was not pushing through a national health insurance plan - an economic and political football we are still tossing around 80 years later.

"The Return of Depression Economics and the Crisis of 2008" by Paul Krugman (Norton, 2009). 2008 Economics Nobel Prize winner Krugman updates his 1999 analysis of the 1990s Asian and Latin American financial crises.

He writes that the current worldwide economic meltdown was largely unanticipated and even considered impossible by leading financial experts. Too many people took too many risks. His prescription is this: "anything that has to be rescued during a financial crisis, because it plays an essential role in the financial mechanism, should be regulated when there isn't a crisis so that it doesn't take excessive risks."

"The Wall Street Journal Guide to the End of Wall Street as We Know It" by Dave Kansas (Collins Business, 2009). Here is a handy and easy-to-read overview with lots of little sidebars on the key players and concepts. The last chapter offers some tips to the person on Main Street, including cutting up your credit cards (easy enough) and renting out an extra room on your home (I think I will wait a while on that one).